How Amazon Delivers On One-Day Shipping

How Amazon Delivers On One-Day Shipping


Before Prime launched in 2005 one-day
shipping was an exorbitant luxury. Now it’s the standard shipping speed
for Amazon’s 100 million Prime members. Earlier this year Amazon doubled
the speed of Prime shipping from two days to one. And the faster speed is now available
on more than 10 million products. Prime one-day is basically going to A)
keep up with the brick and mortar guys and B) enhance Prime. Amazon has changed
the game completely. So what they excel at is getting an
object from a creator to a consumer as flawlessly as they can and
as quickly as they can. So Amazon is changing people’s
expectations and they’re perpetually improving those expectations. But behind every Amazon box there are lots
of people hustling and a lot of money spent to get it to
you in just one day. Here’s what happens when you buy
a Prime eligible item on Amazon.com. Amazon spends tens of billions
on shipping every year. In just the last quarter of
2018, Amazon’s shipping costs jumped 23%, reaching a record $9 billion. So why is it worth it? Well customers come to expect consistent
fast delivery of anything on earth from Amazon. And our job is to
continue to make that happen. And Amazon set aside $800 million just
in the second quarter of 2019 to start making one-day
shipping the norm. Most of that investment is
going towards the infrastructure and transportation costs associated with speeding
up delivery to the millions of Prime customers who are about to
begin to experience one-day as the new normal. The difference with e-commerce is
the costs never end. The pick, pack and ship happens every
time a unit is sent out. To better control this process and its
large cost, Amazon is cutting down its reliance on UPS and the U.S. Postal Service and is investing heavily
in its own logistics network. It now handles the shipping
for 26% of online orders. Amazon now has at least 50
airplanes, 300 semi-trucks, 20,000 delivery vans and it operates ocean
freight services between the U.S. and China. Amazon is looking to do it all. That shouldn’t be much of a surprise. The only thing that matters to Amazon
is making sure the customer is happy and is paying for Prime
every year or every month. What that means is sometimes you can rely
on partners but you want to make sure that you have it in your
pocket if that’s not the case. Other big retailers are also spending a
lot to keep up with the fast shipping expectations Amazon
has created. Walmart is rolling out free next-day shipping
with orders of 35 dollars or more starting today. And target offers free two-day shipping
on orders over 35 dollars. And during Amazon’s big Prime Day sales
event July 15th and 16th, eBay plans to hold a crash sale
offering 80% off big ticket items. Amazon’s 25 years old. The reality is that’s a really short time
to be around to have become the number one player. So can anyone compete? Sure people can compete. Can they sustainably compete
is the harder question. I don’t think we’ve seen it yet. The journey a package takes to your
door starts before you even place the order. Most items on Amazon are sold
directly to you by a third party. In Jeff Bezos’ letter to shareholders
in April 2019, he said third-party sales have grown from 3% of total
merchandise sales in 1999 to 58% in 2018. Amazon charges those sellers a
fee to list items on Amazon.com starting around 15% of
the item’s selling price. Amazon also sells things directly. In some cases Amazon buys inventory from
a third party and then sells it to consumers. Other items are Amazon’s own brands
such as Amazon Basics, Amazon Essentials, fashion lines like Lark & Ro
and Alexa devices like the Echo. All items sold directly by Amazon
are already sitting in an Amazon warehouse waiting to be
ordered and shipped. Most third-party items fulfilled by Amazon
are also already waiting at an Amazon warehouse, while others are sent directly
from the seller or to an Amazon warehouse once you hit
that place order button. Amazon does not disclose the
details of its inventory strategy. Figuring out where a product sits before
you buy it is a phenomenal mystery. It’s something that every
reseller would love to know. And figuring out the code that is
Amazon has been part of that hard process. After an item is ordered and ready
at one of Amazon’s 175 fulfillment centers around the globe, it’s picked, packaged
and shipped by some of its 250,000 warehouse workers often with help
from one of its 100,000 robots. It’s essentially an amusement
park for a box. There’s conveyor belts that go
around, there are slides. It looks like a lot of fun. But the question is: how much is
automated versus how much his manual labor? And that suite, blending that, figuring
out how to have the least human touch points while ensuring the
best quality control is that perpetual conversation. We visited a fulfillment center outside
Seattle where 2,000 workers prepare packages on a couple million
square feet of floor space. Workers here showed us the process of
getting an item from the shelves to a box. We scan the item and make sure that
that item is what matches what’s in our hand that’s on the screen and then
we stow it into a bin. And then there’s cameras here that take
pictures of where our hands go of where we place the item. I am a picker so I pick product that
will end up going down to the packing department and then they pack it out
and send it to our customers. I need to put it into a box. It actually tells me what
type of box it is. Tape. Put the item in there. Scan it through. Drop
it down the line. Amazon says it’s 100,000 robots inside
the fulfillment centers help make this whole process more efficient. In 2012 Amazon bought robotics company
Kiva for $775 million and started using robots in its fulfillment
centers a couple years later. Now there’s driving robots that move
inventory around, robotic arms that lift boxes and pallets and even a
new robot that can package items in custom-sized boxes. If it wasn’t for them then I’d have to
walk and I’d much rather be up here in my own little world picking
then walking up and down. So I love the robots. As technology continues to change
how fulfillment centers function, Amazon just announced it will spend $700 million
to retrain a third of its U.S. workforce by 2025 to move
them to more advanced jobs. After an order leaves the fulfillment center
it has to get across the country or world to another
warehouse in your region. Some boxes are sent via one of
the shipping giants, but Amazon is cutting costs by sending packages in at least
300 of its own semi-trucks and now dozens of its own planes. We’ve been building out an air network
for a number of years now. That coupled with our partners networks, we’re in
a place we have a lot of incremental capacity to be able to
advance packages for customers much faster than we were two
or three years ago. Amazon broke ground on a new 1.5 billion dollar air hub in
Northern Kentucky in May. It has capacity for 100 planes. One of the great things about customers
all over the world: they are divinely discontent. You give them the
best service you can. They love it. But they always want
a little bit more. We’re going to move Prime from two-day to
one-day and this hub is a big part of that. After an item arrives near your city
it waits in another warehouse like this one for a delivery person to pick it
up and take it that last mile to your door. We’ve been building for over 20
years to support this network that’s eventually just constantly getting faster and
we knew would begin to migrate to a one-day service. The big difference for us is all
about how we get product from our fulfillment center to
that last-mile location. Last-mile is the most expensive
part of the delivery process. Until an item arrives at a warehouse near
your home, it can be shipped in bulk. But then each package needs to
be hand delivered to a different address, which takes a lot of
people and a lot of time. Amazon pays to outsource much of
last-mile delivery to carriers like UPS and USPS, which charge a fee,
and those fees just went up. In January the post office increased
its last-mile shipping rate by nine to 12% depending on package size. The more Amazon can keep last-mile
delivery in-house, the more it can control these costs. To do that Amazon uses small
business partners, some delivering out of 20,000 Amazon vans. And in 2015 it launched Amazon Flex. I’ve been driving for Amazon Flex roughly since
2016 on and off, I’d say at least two solid years. Amazon Flex is available
in about 50 U.S. cities. Anyone over 21 with a
driver’s license, auto insurance and at least a mid-size sedan can sign up. After clearing a basic background check,
drivers in areas with open spots can start picking up
and delivering packages. Drivers use the Flex app to sign up
for a block, which ranges from three to six hours. Then they head to a warehouse where
they find out how many boxes they’ve been assigned to deliver
in that timeframe. Amazon advertises that drivers make $18
to $25 an hour and they’re responsible for their own vehicle costs
like gas, tolls and maintenance. Amazon wouldn’t disclose how many drivers
have signed up or what percentage of its last-mile deliveries are
made by Flex drivers compared to its shipping partners. But it did tell us their
last mile delivery programs are expanding. We’ve built out these small businesses,
the delivery service providers, and we have Flex which is
our on-demand crowdsourced delivery piece. So we need all of that to meet the
various types of delivery we do in each of our geographies and I think you’re
going to see expansion on all fronts there. Amazon has one unusual approach to
increase its number of small business partners helping with last-mile. Amazon says it will contribute as
much as 10,000 thousand dollars if full-time employees want to leave the
company and start their own package delivery services. Early response is great. It allows us to complement the capacity
that we have with our great carrier partners. It’s great for some of our employees who
don’t want to do the same thing that they’ve been doing in the warehouse
for five or 10 years. They want to learn some new skills
and over 16,000 employees have already taking us up on this. Amazon is also looking at several
high-tech solutions to streamline last mile delivery. In June, Amazon announced its new
autonomous delivery drone will be operating within months and it has a
one year FAA permit to test them. We’re building fully electric drones that can
fly up to 15 miles and deliver packages under five pounds to
customers in under 30 minutes. Amazon also has patents out for a
giant flying warehouse and drones that can react to flailing
hands and screaming voices. And it’s even testing a sidewalk
robot called Scout to bring packages right to your door. All these steps are an incredible
challenge to pull off. In recent years, Amazon has faced an
onslaught of negative press about working conditions at every
step of the process. We spoke to several
workers about their concerns. The working conditions at Amazon
are dangerous and that’s systemic. I’ve worked in five different buildings
in three different states from coast to coast and
it’s the same everywhere. It might not be outright exploitation but
it is almost like a disposable workforce. It’s been so pervasive that many of the
pilots, in fact most of the pilots at our airlines are
actively seeking employment elsewhere. Last year Amazon raised the minimum wage
to fifteen dollars for all its 350,000 U.S. employees, more than double the
federal minimum wage of $7.25. In his annual letter to shareholders,
owner Jeff Bezos challenged other top retail companies to match this. And Amazon offers generous benefits. I needed my medical insurance. That’s what’s essentially kept
me at Amazon. But some workers, most who asked
to remain anonymous, told us Amazon expects them to keep up
a fast, often unreasonable pace. They say that they care
about their employees and quality. But no, it’s really
just about numbers. You have to make not only a certain
rate but you can’t accrue more than 30 minutes of time-off-task per day
otherwise you get written up. Usually most buildings are at
least a million square feet. You could be walking three to five
minutes each way to go to bathroom. So if you went to the bathroom twice
you could easily use up that 30 minutes. So a lot of people
don’t go to the bathroom. CNBC was connected to Fuller through
the Retail, Wholesale and Department Store Union. Although he’s not a union member. We asked Amazon about the
working conditions in fulfillment centers. We have world class facilities, we
have restrooms all over this place. We have break rooms. We have TVs. Anybody who is watching, don’t
take my word for it. Please come take a tour
and see for yourself. I’ll put us up
against anybody any day. Do you feel like the pace that workers
are asked to work out is reasonable? Well our, the way we look at
productivity rates, just like anyone, we have expectations. In every job, my job
has expectations, your job has the expectations. The way we set the rates
and the processes are based on actual performance and the overwhelming majority
of employees are able to meet those expectations. Warehouse workers told us their productivity
is closely tracked based on how often they scan a package. Workers told us they can get written
up if they don’t meet certain metrics. Amazon also has patents for a
GPS-enabled wristband that could track workers’ movements and breaks. I think too often people look at
that technology and sort of debate, is this Big Brother tracking an employee
or something to that effect? And you know really almost all the
time you look at these wearables or other types of things like that,
they’re usually some form of safety device. Workers can lose their jobs if
they don’t work fast enough. At one warehouse in Baltimore, The
Verge reported that Amazon terminated 300 full-time associates in a one-year
period between 2017 and 2018 for inefficiency. Amazon said in a statement
that “the number of employee terminations have decreased over the last
two years at our Baltimore facility as well as
across North America.” Amazon workers are under attack. What do
we do? Stand up, fight back. There have been several protests in the
last few years around the world where Amazon workers have
demanded better working conditions. In orientation they
talked about safety. That was the number one thing. Safety. And you get
there and that’s forgotten. In the UK, ambulances were called to
Amazon warehouses 600 times from 2015 to 2018. In April, the National Council
for Occupational Safety and Health identified Amazon as one of a
“dirty dozen” companies, citing six deaths in seven months and
13 deaths since 2013. But Amazon says that last year alone
it spent $55 million in safety improvements at fulfillment centers and its
employees got a million hours of safety training. As Amazon increases the shipping speed,
can they also increase conditions to be more fair, equitable and
sustainable as far as safety goes? Well I’m incredibly proud of the safety
record of our sites and the focus of our leadership team on safety. Any incident is one too many and
anytime something happens, our teams come together and figure out what happened and get
to the root cause and try to eliminate anything from occurring
again in the future. Amazon Air is another area where growth
in the program has led to challenges. Amazon-branded planes are flown
by contract pilots from Atlas Air, ABX and Southern Air. These airlines negotiate contracts
with the pilots. And five of these pilots told
us working conditions have deteriorated since their airlines started
flying for Amazon. As a result of Amazon being such a
large company, they have the ability to put a very strong pressure on our
companies and have them drive down our pay and working conditions as pilots. Dan Wells heads up the
union that represents these pilots. They protested outside Amazon’s annual
shareholder meeting in May. They also spoke out in April against
poor working conditions and low pay near the new Amazon air hub. We have a hard time
maintaining enough qualified pilots. There’s a tremendous amount of turnover
at these carriers which in net reduces experience and creates a lot of
stress on things, a lot of frustration, which certainly distracts people
from their duties as pilots. In February, an Amazon Air plane
operated by Atlas Air crashed near Houston, killing all
three pilots aboard. The cause of the crash is
under investigation with initial National Transportation Safety Board findings showing
the pilots may have lost control of the plane. In interviews with Business Insider
weeks before, several Amazon Air pilots said they thought
an accident was inevitable. They cited low wages that made
it difficult to attract experienced pilots, training they considered shoddy,
fatigue and poor morale. Pilots that are working for
Amazon’s contractors are overwrought with schedules and scheduling changes
and constant training. All of those things have added to
greatly increasing the risk in the cargo system that we fly in. In a statement Amazon said, “All
of our airline delivery providers must comply with the Amazon Supplier Code
of Conduct and Federal Aviation Administration regulations. We take seriously any allegation that
a delivery provider is not meeting those requirements and expectations
and review accordingly.” Workers bringing packages that last mile to
your door also told us safety is a concern. One reason: Amazon doesn’t provide Flex
drivers with any branded clothing to identify them. I’m pulling up to this house and I get
to the front door and you know this guy just comes running out like,
“Hey what are you doing?” and he’s talking so fast and I
was thinking you know I’m in Connecticut. You know I’m a Puerto Rican guy in
a white guy’s yard and like, you know, what if he just comes out and
shoots me in the face without asking questions? You know that was my fear. After another delivery where he says
a customer let his German Shepherd charge at him, Jonathan paid 45 dollars out
of his own pocket for a custom sweater on Etsy. I think Amazon the least they could do
is give us something that would make it a little bit safer and make
us more visible when we’re out there delivering. I’ve gotten a lot of mean glares
from people because they’re like, “Who is this guy? He’s just in front of my driveway or he’s
parked in front of my house. He’s just wearing a yellow vest.” You don’t even have to
wear that vest. It’s just, I do it because at
least I look less suspicious. In a statement Amazon said, “They are
welcome to wear the safety vests that we have available for them in the
delivery stations while they’re on their route which can help
customers identify Flex participants.”. And some drivers told us the way
the Flex app works encourages distracted driving because it requires drivers to
manually tap refresh to secure their next assignment. If you want to get blocks then you
have to be tapping on that refresh button in the app
pretty much constantly. But how do you do
that while you’re delivering? So it encourages people to
do it while they’re driving. In a statement Amazon says, “Safety is our
top priority and we are proud of our safe driving record. We regularly communicate a variety of
safety topics including loading and driving practices with drivers. Amazon Flex participants can also sign up
for delivery blocks up to a week in advance through the
Amazon Flex app.” Amazon is working to ease the burden
on its delivery drivers and save money with high-tech solutions like those drones
and Scout sidewalk robots, and its fulfillment centers are
becoming more automated, too. Our focus on automation has really been
begin in automation in the places that can be most
beneficial to the workforce. Remove the most tedious task, remove
the heaviest lifting task, whether that be lifting large containers or
bringing the inventory to the associate so they don’t have to
walk through Earth’s most massive selection in order to find
the thing they’re looking for. But for now Amazon still relies on people
to bring us our packages in just one day. And with expectations for
rapid delivery only growing, Amazon will need to continue innovating
to make shipping even faster. We will see shipping
speeds increase every day. The announcement that Amazon is going
to one-day is ironic because in certain regions we have it
in an hour already. That’s not going to stop. And what’s absolutely critical is any
company that sticks their head in the sand even if it’s Amazon. We’ll see the competition
pass them by. That’s the one guarantee
we have in retail.

100 comments

  1. Prime has to start shipping with smaller boxes. I bought a battery the other day for my camera and it came in a box big enough to ship 100 batteries.

  2. Amazon makes quite amazing improvements and high standard for delivery service but after knowing the horrifying case of death of one of their under-trained employees this just disappoints me.

  3. Lots of people working for next to nothing. Amazon is the devil. Sad the same people who are MAGA supports can't get enough of cheap crap from China. You cant have it both ways either you are willing to pay up or you are not, most are not. They just like to complain.

  4. Haha I just ordered a product on Amazon and it will be delivered in 10days LOL
    I get it, this video is just a joke ?

  5. Hey if you don't like your employer holding you to productivity standards, then quit and work somewhere else – maybe a nonprofit or a government job.

  6. I just got same day shipping on Sunday. I did feel bad. But it was for a portable car starter. I needed it so I could go to work on Monday. It really did come that same day!!

  7. I started doing amazon flex these people just complain too much you don’t look for blocks while working you focus on delivering

  8. LOL.." This helps us to keep up with the Brick and Mortar guy"…~~~~COUGH~~~ER, UM~~~~ i mean to destroy them to their last molecule of existence…To lose the word "store" from the lexicon…DIE YOU RETAIL BUSINESSES, DIE LIKE THE DOGS YOU ARE… But, yes, we only hope we can keep up with them all…~ ᵀᴱᴱ ᴴᴱᴱ~

  9. Amazon prime is the best creation since sliced bread lol all of my christmas shopping was done from the comfort of my couch and arrived in 3 days or less best part is the only person I had to talk to was my delivery guy or as my kids call him "Santa's elf"

  10. Just dont call Customer Service because the badly trained staff dont have no idea how to help you . the person didnt even know how to check my address correctly smh . for the excuse they are new , well dont put a headset on them untill they can at least know the basic except asking me every 5 minute to sign up for prime

  11. Yes Dave Clark, those wrist bands are definitely so big brother can track productivity. I wouldn't be surprised if you're tracking heart rate and/or blood pressure as well, so you can fire an employee before they need to take a medical or disability leave on amazon's dime.

  12. America is like so big that this is hard I live in the Netherlands and one day shipping is the standard here, even ordering on sunday you get it on monday and lots of websites even have same day shipping if you order earlier than like 9-10 in the morning

  13. Crazy horrific increasing pressure in a society insisting on instant gratification is a sure recipe for disaster for that entire society.

  14. A company don't value their employees enough yet still thrive. I wonder what happen to this world? everything is capital oriented

  15. It frustrates me every single time it says free. Even the newslady said "rolls out free shipping". It's so stupid, shipping is not free, you have to pay for it one way or another. All that matters is whether or not they tell you "+$7" or whether they just include the $7 within the price itself.

  16. I will never work for Amazon there's a lot of the other people that are loud disgruntled workers that have lawsuits against Amazon people got hurt and they got they got fired and they were weren't allowed to get surgery in things they're being sued for it they're evil company I would never work for them f*** Amazon I would buy for them and I would never work for them

  17. The process is cool but for the most part I would still rather get it from a physical store if I can. 1 day shipping is still not instant like it is when you go to a physical store. Plus, Prime is more money than I want to spend because I don't buy enough stuff from Amazon for it to make sense. Then the question is if you return an item, is that 1 day shipping too and then if you're getting a different size in a shirt or something, is that 1 other day back to your house?

    With working conditions, it sounds what I hear about Walmart or kinda like my experience at IRS. At IRS, you have to keep up with crazy metrics. So I got another job thankfully. We all have the options of other jobs. It's not always easy when you're starting out but you definately have other options available out there.

  18. Everybody complaining about working condition but there wont be any working condition once amazon gets more and more automated lol. Then they gonna wish for those working conditions ??‍♂️

  19. Unreal I ordered 1 day 2 times recently and the one packed was 3 days late and the second one took 3 days to ship and it's still not at my house…..unreal I just did a chargeback for my recent purchase

  20. Pushing workers to the point of thousands of injuries is also another reason. Thousands of injuries. But yes, all these other reasons as well.

  21. I stayed up all night doing some uni research, before going to bed I placed an order for 2 items on amazon worth about £300. all three items arrived before I woke up. And this was on black friday

  22. i came here to watch and learn how Amazon actually delivers items within one-day shipping… what the video is all about is, how bad Amazon treats their employees…

  23. Excuse me what about using the 9 billion to think about the planet instead of changing it from 2 day to 1 day shipping

  24. "Amazon is looking to ease the burden on delivery drivers with it's drone and sidewalk delivery" LMAO… no they trying to save money and put you out of a job.
    Who y'all kidding.

  25. False I bought a prime eligible gaming chair prime shipping was 5-7 days not fast at all. In fact prime no longer guarantees 2 day shipping….

  26. Other shipping companies are stupid, they should be focusing on reducing cost while increasing and improving their services.
    i'm a prime member but fack amazon

  27. Amazon's move into 1 day shipping is just a rabbit hole. And a vicious cycle. Sure, amazon is able to drive down costs and maybe even make delivery time lower. But what about other competitors? In USA mega corporations appear because of government ignorance. Eventually business consolidation and too big to fail companies will run the politics of USA instead.

  28. They dont hire employes to do the transporation and deliveries, they hire slaves and they pay thr worst possible hourly rates especially the overnight semi trucks they have algoritam to calculate the salary for the slaves
    No one should work for them that slave work

  29. Looking at this video and I'm a prime member I'm very unhappy how they Treat The people that work for them . I don't need my packages in 1or 2 days if Someone can't go to the restroom. I'm rethinking about my prime membership with them.

  30. Three years ago my dog ran out the front door when I opened it to retrieve my package. The nice fellow in his own car (a woman was with him) ran down the street to catch my dog for me. I was so grateful to him! That was above and beyond customer service.

  31. I applied to amazon in the past and I’m glad I didn’t go through with it past orientation. They watch every move you make and the bathroom break thing seems absolutely ridiculous to me. People peeing in bottles?! I’m assuming it’s mostly guys who are doing this because women we can barely aim a straight shot in a freakin bottle ?

  32. Shittiest company to work for in my opinion. They truly treat there warehouse employees like robots. I absolutely hated it

  33. “If it wasn’t for the robot, I would have to walk”

    10 years later

    “If it wasn’t for the robot, I would have a job”

  34. Beware of Amazon Subscriptions fraudulent practices. They signed me up and charged my credit card to Amazon music by picking up the word "yes" on Alexa when looking for music on YouTube. I asked customer service why it was so easy to accidentally sign me up and not so easy to cancel in the same manner.

    The Agent said that's the way it was built and hung up.

  35. Do Amazon workers know they are just 1 ROBOT AWAY from losing their jobs? Are they going to blame immigrants for losing their jobs to robots?

  36. It shows the people at the top are not bothered. When someone dies you don't say, "We are investigating to see what happens and plan to improve in the future." How do you not know how someone died?.. This is disappointing.

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